SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
CRANE CO.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------
3) Filing Party:
-------------------------------------------------------
4) Date Filed:
-------------------------------------------------------
<PAGE>
[CRANE LOGO]
CRANE CO. 100 FIRST STAMFORD PLACE, STAMFORD, CONNECTICUT 06902
March 7, 1997
DEAR CRANE CO. SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Crane Co., to be held at 10:00 a.m. Eastern Daylight Time on Monday, April
21, 1997 at the Sheraton Stamford Hotel, Freedom II Meeting Room, One First
Stamford Place, Stamford, Connecticut.
The Notice of Meeting and Proxy Statement on the following pages describe
the matters to be presented at the meeting. Management will report on current
operations and there will be anopportunity for discussion of the Company and its
activities. Our 1996 Annual Report accompanies this Proxy Statement.
It is important that your shares be represented at the meeting regardless
of the size of yourholdings. If you are unable to attend in person, we urge you
to participate by voting your shares by proxy. You may do so by filling out and
returning the enclosed proxy card.
Sincerely,
/s/ R.S. EVANS
--------------------------------------
R.S. EVANS
Chairman and Chief Executive Officer
<PAGE>
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CONNECTICUT 06902
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1997
------------------------
March 7, 1997
To The Shareholders of Crane Co.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of the Shareholders of Crane
Co. will be held at the Sheraton Stamford Hotel, Freedom II Meeting Room, One
First Stamford Place, Stamford, Connecticut on Monday, April 21, 1997 at 10:00
a.m., Eastern Daylight Time, for the following purposes:
1. To elect three directors to serve for three year terms until the Annual
Meeting of Shareholders in 2000.
2. To consider and act upon a proposal to approve the selection of Deloitte &
Touche LLP as independent auditors for the Company for 1997.
3. To transact such other business as may properly come before the meeting in
connection with the foregoing or otherwise.
The Board of Directors has fixed the close of business on February 28, 1997
as the date for the purpose of determining shareholders entitled to notice of
and to vote at said meeting or any adjournment thereof. A complete list of such
shareholders will be open to the examination of any shareholder during regular
business hours for a period of ten days prior to the meeting at the offices of
the Company at 100 First Stamford Place, Stamford, Connecticut.
In order to assure a quorum, it is important that shareholders who do not
expect to attend the meeting in person fill in, sign, date and return the
enclosed proxy in the accompanying envelope.
By Order of the Board of Directors,
-------------------------------------
AUGUSTUS I. DUPONT
Secretary
IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, WE REQUEST THAT YOU WRITE
FORYOUR CARD OF ADMISSION TO THE SECRETARY, CRANE CO., 100 FIRST STAMFORD
PLACE, STAMFORD, CONNECTICUT 06902.
<PAGE>
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CONNECTICUT 06902
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1997
The enclosed proxy is solicited by the Board of Directors of Crane Co. (the
"Company") for use at the Annual Meeting of Shareholders to be held at the
Sheraton Stamford Hotel, Freedom II Meeting Room, One First Stamford Place,
Stamford, Connecticut, on Monday, April 21, 1997, at 10:00 a.m., Eastern
Daylight Time, or at any adjournment thereof. The enclosed proxy, when properly
executed and received by the Secretary prior to the meeting, and not revoked,
will be voted in accordance with the directions thereon or, if no directions are
indicated, the proxy will be voted for each nominee for election as a director
and for the proposal to approve the selection of Deloitte & Touche LLP as
independent auditors for the Company for 1997. If any other matter should be
presented at the Annual Meeting upon which a vote may properly be taken, the
shares represented by the proxy will be voted with respect thereto in accordance
with the discretion of the person or persons holding such proxy. Proxies may be
revoked by shareholders at any time prior to the voting of the proxy by written
notice to the Company, by submitting a new proxy or by personal ballot at the
meeting. The first date on which this proxy statement and enclosed form of proxy
are being sent to the Company's shareholders is on or about March 7, 1997.
OUTSTANDING SHARES AND REQUIRED VOTES. As of the close of business on
February 28, 1997, the record date for determining shareholders entitled to vote
at the meeting, the Company had issued and outstanding 45,551,059 shares of
Common Stock, par value $1.00 per share ("Common Shares" or "Common Stock").
Each Common Share is entitled to one vote at the meeting. Directors will be
elected by a plurality, and the approval of auditors will require the
affirmative vote of the holders of a majority of the Common Shares present in
person or represented by proxy and entitled to vote at the meeting. Abstentions
may be specified as to all proposals to be brought before the meeting other than
the election of directors. Under the rules of the New York Stock Exchange, Inc.
(the "NYSE"), brokers holding shares for customers have authority to vote on
certain matters even if they have not received instructions from the beneficial
owners, but do not have such authority as to certain other matters (so-called
"broker non-votes"). The NYSE has advised the Company that member firms of the
NYSE may vote without specific instructions from beneficial owners on all of the
proposals to be considered at the meeting. With regard to the election of
directors, votes may be cast in favor or withheld, and the three persons
receiving the highest number of favorable votes will be elected as directors of
the Company. As to the approval of auditors, if a shareholder abstains from
voting certain shares it will have the effect of a negative vote.
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of nine members divided into
three classes. At the meeting three directors are to be elected to hold office
for three year terms until the 2000 Annual Meeting and until their successors
are elected and qualified. The enclosed proxy will be voted for election of the
three directors of such class named in the following table, whose election has
been proposed and recommended by the Board of Directors. If any nominee shall,
prior to the meeting, become unavailable for election as a director, the persons
named in the accompanying form of proxy will vote for such nominee, if any, as
may be recommended by the Board of Directors, or the Board of Directors may
reduce the number of directors to eliminate the vacancy.
The age, position with the Company, period of service as a director of the
Company, business experience during the past five years, directorships in other
companies and shareholdings in the
1
<PAGE>
Company as of February 28, 1997 for each of the nominees for election and for
each of those directors whose term will continue are set forth below:
COMMON SHARES
BENEFICIALLY
OWNED (1)
-------------
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS TO EXPIRE IN 2000
R. S. EVANS ..................................................... 1,924,054
Age 52; Director since 1979. Chairman and Chief Executive
Officer of the Company. Chairman and Chief Executive
Officer of Medusa Corporation. Other directorships:
Fansteel, Inc., HBD Industries, Inc., Medusa Corporation.
DORSEY R. GARDNER ............................................... 4,203
Age 54; Director 1982 to 1986 and since 1989. President, Kelso
Management Company, Inc., Boston, MA (investment
management). Other directorships: Filene's Basement Corp.,
Medusa Corporation.
DWIGHT C. MINTON ................................................ 26,715
Age 62; Director since 1983. Chairman of the Board, Church &
Dwight Co., Inc., Princeton, NJ (manufacturer of consumer
and specialty products). Other directorships: Church &
Dwight Co., Inc., First Brands Corporation, Medusa
Corporation.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1998
MONE ANATHAN, III ............................................... 2,819
Age 57; Director since 1992. President, Filene's Basement
Corp., Boston, MA (retailer). Other directorships:
Brookstone, Inc., Filene's Basement Corp., Medusa
Corporation.
RICHARD S. FORTE ................................................ 10,896
Age 52; Director since 1983. President, Dawson Forte Cashmere
Company, South Natick, MA (importer). Chairman since
January 1997 and, prior thereto, President, Forte Cashmere
Company, Inc. (importer and manufacturer). Other
directorships: Medusa Corporation.
JEAN GAULIN ..................................................... 3,045
Age 54; Director since 1996. Vice Chairman, President and
Chief Operating Officer, Ultramar Diamond Shamrock
Corporation, San Antonio, TX (petroleum refining and
marketing) since 1996; Chairman and Chief Executive
Officer, Ultramar Corporation, Greenwich, CT, 1992 to 1996
(petroleum refining and marketing). Other directorships:
Medusa Corporation, Quebec Telephone, Ultramar Diamond
Shamrock Corporation.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1999
E. THAYER BIGELOW, JR. .......................................... 15,308
Age 55; Director since 1984. President and Chief Executive
Officer, Time Warner Cable Programming Inc., Stamford, CT,
a subsidiary of Time Warner Entertainment LP (basic cable
television program services), 1991 to present; President,
Home Box Office, Inc., a subsidiary of Time Warner, Inc.,
1988 to 1991. Other directorships: Lord Abbett Mutual Funds,
Medusa Corporation.
CHARLES J. QUEENAN, JR. ......................................... 11,393
Age 66; Director since 1986. Senior Counsel, Kirkpatrick &
Lockhart LLP, Pittsburgh, PA (attorneys at law). Other
directorships: Allegheny Teledyne Incorporated, Medusa
Corporation.
2
<PAGE>
COMMON SHARES
BENEFICIALLY
OWNED (1)
--------------
BORIS YAVITZ .................................................... 6,774
Age 73; Director since 1987. Principal, Lear, Yavitz &
Associates LLC, New York, NY (governance consultants);
Paul Garrett Professor Emeritus of Public Policy and
Business Responsibility, Dean Emeritus, Columbia
University Graduate School of Business, New York, NY;
Deputy Chairman and Director, Federal Reserve Bank of
New York, 1976 to 1982; Director & Vice Chairman, The
Institute for the Future. Other directorships: Israel
Discount Bank of New York, Medusa Corporation.
- - -----------
(1) As determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934. No director except Mr. R. S. Evans owns more than 1% of the
outstanding Common Shares of the Company. See Beneficial Ownership of
Common Stock by Directors and Management, page 4.
The Board of Directors met 10 times during 1996. All directors attended 75%
or more of the Board and Committee meetings which they were scheduled to attend.
The Board of Directors has an Executive Committee, Audit Committee and
Organization and Compensation Committee. The Company does not have a standing
nominating committee. The Executive Committee, which meets when a quorum of the
full Board of Directors cannot be readily obtained, met twice in 1996. The Audit
Committee met three times in 1996 with the Company's management, internal
auditors and independent auditors to review matters relating to the quality of
financial reporting and internal accounting controls and the nature, extent and
results of their audits, and otherwise maintained communications between the
auditors of the Company and the Board of Directors. The duties of the
Organization and Compensation Committee include review and approval of the
compensation of officers and business unit presidents, annual review of director
compensation, administration of the EVA Incentive Compensation Plan, Stock
Option Plan and Restricted Stock Award Plan and review and approval of
significant changes or additions to the compensation policies and practices of
the Company. The Organization and Compensation Committee met three times in
1996. (See the Committee's report on page 10.)
The memberships of committees during 1996 were as follows: Executive
Committee: E. T. Bigelow, Jr., R. S. Evans, D.C. Minton and B. Yavitz; Audit
Committee: E. T. Bigelow, Jr., R. S. Forte, D. R. Gardner and C. J. Queenan, Jr.
(Chairman); Organization and Compensation Committee: D. R. Gardner, J. Gaulin,
D. C. Minton and B. Yavitz (Chairman).
COMPENSATION OF DIRECTORS. The Company's standard retainer payable to each
non-employee director is $25,000 per annum. Pursuant to the Non-Employee
Director Restricted Stock Plan, non-employee directors receive, in lieu of cash,
shares of Common Stock of the Company with a market value equal to that portion
of the standard annual retainer which exceeds $15,000. All directors who are not
full-time employees of the Company, of which there are eight, participate in the
plan. The shares are issued each year after the Company's annual meeting, are
forfeitable if the director ceases to remain a director until the Company's next
annual meeting, except in the case of death, disability or change in control,
and may not be sold for a period of five years or such earlier date as the
director leaves the Board. In May 1996 each non-employee director received 360
restricted shares of Common Stock pursuant to the plan.
Directors also receive $500 for each Board meeting attended. Non-employee
members of the Executive Committee receive an annual retainer of $2,000. Members
of other committees receive $500 and chairmen receive $750 for each committee
meeting attended.
The Crane Co. Retirement Plan for Non-Employee Directors provides for a
benefit upon retirement at or after age 65 equal to the participant's annual
retainer in effect at the time service terminates, payable for a period of time
equal to the number of years the participant has served on the Board and not as
an employee. After two years of service, participants are 50% vested in benefits
payable, and after each full year of service thereafter, participants are vested
in an additional 10%. In
3
<PAGE>
the event of death, disability or change in control, participants are
automatically 100% vested and, in the case of a change in control, a minimum of
seven years of retirement benefits is payable. Additionally, a participant
leaving the Board after a change in control would be entitled to receive, in
lieu of installment payments, a lump sum cash payment such that the participant
will retain, after all applicable taxes, the actuarial equivalent of the
benefits payable under the plan. A former director may receive his benefits
prior to age 65 on an actuarially reduced basis and in the form of a joint and
survivor benefit and/or a pre-retirement spouse benefit. The plan is unfunded
and benefits thereunder are payable from the Company's general assets.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY DIRECTORS AND MANAGEMENT
To focus management attention on growth in shareholder value, the Company
believes that officers and key employees should have a significant equity stake
in the Company. It therefore encourages its officers and key employees to
increase their ownership of and to hold Common Stock through the Stock Option,
Restricted Stock Award and Savings and Investment Plans. Directors also receive
40% of their annual retainer in Restricted Stock issued under the Non-Employee
Director Restricted Stock Plan. The beneficial ownership of Common Stock by the
non-employee directors as a group (see pages 2 and 3 for individual holdings),
the executive officers named in the Summary Compensation Table and the other
executive officers of the Company as a group as of February 28, 1997 is as
follows:
<TABLE>
<CAPTION>
STOCK SHARES IN
SHARES OPTIONS COMPANY TOTAL % OF SHARES
UNDER EXERCISEABLE SAVINGS SHARES OUTSTANDING
SHARES RESTRICTED WITHIN PLAN BENEFICIALLY AS OF
OWNED STOCK PLANS(1) 60 DAYS (401(K)) OWNED(2) 2/28/97
------ ------------- ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Non-Employee Directors
and Nominees as a Group
(8 persons) ........... 78,273 2,880 -- -- 81,153 0.18%
R. S. Evans ............ 1,119,254(3) 392,694 405,000 7,106 1,924,054 4.22%
L. H. Clark ............ 3,489 114,111 81,750 1,109 200,459 0.44%
R. J. Muller, Jr. ...... 183,240 49,406 18,000 8,933 259,579 0.57%
D. S. Smith ............ 7,484 79,817 87,375 1,136 175,812 0.39%
M. L. Raithel .......... 95,598 38,606 82,125 4,076 220,405 0.48%
Other Executive
Officers
(4 persons) ........... 94,487 82,335 155,463 9,548 341,833 0.75%
Sub-Total--Directors
and Executive
Officers as a
Group (18 persons) .... 1,581,824 759,849 829,713 31,908 3,203,295 7.03%
Key Employees (91 persons) 78,316 160,851 561,112 110,135 910,664 2.00%
--------- ------- --------- ------- --------- -----
Total .................. 1,660,140 920,700 1,391,075 142,043 4,113,959 9.03%
========= ======= ========= ======= ========= =====
</TABLE>
- - -------
(1) Subject to forfeiture if established performance and/or service conditions
are not met.
(2) As determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934. Does not include: 5,185,611 shares of Common Stock owned by The
Crane Fund (See Principal Shareholders of the Company); nor 340,314 shares
of Common Stock owned by the Crane Fund for Widows and Children; nor an
aggregate of 455,811 shares of Common Stock held by trusts for the pension
plans of the Company and certain of its subsidiaries which shares may be
voted or disposed of in the discretion of the trustees unless the sponsor of
the particular plan directs otherwise. Messrs. Smith and Raithel and four
other executive officers are Trustees of The Crane Fund and the Crane Fund
for Widows and Children. None of the directors or trustees has any direct
beneficial interest in, and all disclaim beneficial ownership of, the shares
held by the trusts. In addition, as of February 28, 1997, 4,234 other
employees of the Company held 1,336,254 shares of Common Stock in the Crane
Co. Savings and Investment Plan, 267 shares of Common Stock in the Mark
Controls 401(k) Savings Plan, and 24,771 shares of Common Stock in the ELDEC
Corporation Deferred Income Plan and Trust, resulting in a total of
5,475,250 shares of Common Stock held by directors, officers and employees
or 12.02% of the outstanding shares of February 28, 1997.
(3) Includes 320 shares owned by Mr. Evans' spouse.
4
<PAGE>
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following table sets forth the ownership by each person who owned of
record or was known by the Company to own beneficially more than 5% of its
Common Shares on February 28, 1997.
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- - -------------- ------------------- ---------- --------
Common ................ The Crane Fund (1) 5,185,611(1) 11.38%
100 First Stamford Place
Stamford, CT 06902
- - ----------
(1) The Crane Fund is a charitable trust managed by trustees appointed by the
Board of Directors of the Company. The incumbent trustees are: G.A.
Dickoff, A. I. duPont, R.B. Phillips, M.L. Raithel and D.S. Smith, all of
whom are executive officers of the Company. Pursuant to the trust
instrument, the shares held by the trust shall be voted by the trustees as
directed by the Board of Directors, the distribution of the income of the
trust for its charitable purposes is subject to the control of the Board of
Directors and the shares may be sold by the trustees only upon the
direction of the Board of Directors. None of the directors or the trustees
has any direct beneficial interest in, and all disclaim beneficial
ownership of, shares held by The Crane Fund.
EXECUTIVE COMPENSATION
A. SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to the Company's Chief
Executive Officer and to each of the four most highly paid executive officers
for each of the last three completed fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------- ---------------------------------------------------
OTHER RESTRICTED SECURITIES ALL(4)
ANNUAL STOCK UNDERLYING LTIP (3) OTHER
NAME AND COMPENSATION AWARDS(2) OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS(1)($) ($) ($) SARS (#) ($) ($)
- - ------------------- ---- --------- ---------- ------------ ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R.S. Evans 1996 640,000 660,392 194,399 757,254 45,000 1,530,258 8,782
Chairman and Chief 1995 610,000 526,256 153,450 3,678,192 45,000 0 7,644
Executive Officer 1994 610,000 347,457 112,031 0 90,000 0 6,926
L. Hill Clark 1996 375,000 324,243 54,614 45,518 37,500 203,722 7,687
President and Chief 1995 273,391 261,289 26,609 17,220 67,500 0 6,115
Operating Officer 1994 240,000 121,714 9,375 0 30,000 0 7,523
R.J. Muller 1996 240,000 165,714 26,101 45,518 15,000 661,078 6,536
Executive Vice 1995 240,000 182,833 32,912 130,872 18,000 0 5,429
President 1994 240,000 181,662 34,361 0 18,000 0 5,699
D.S. Smith 1996 250,000 224,462 40,090 12,414 22,500 404,721 5,177
Vice President-- 1995 240,000 179,353 31,077 6,888 30,000 0 4,927
Finance & Chief 1994 206,908 109,349 15,939 0 37,500 0 5,000
Financial Officer
M. L. Raithel 1996 165,000 170,345 19,863 16,552 15,000 228,866 5,435
Controller 1995 157,000 142,281 18,094 61,992 22,500 0 5,105
1994 151,000 93,001 16,879 0 22,500 0 4,620
</TABLE>
- - ---------
(1) The named executives have credited to their accounts under the Company's
EVA Incentive Compensation Plan for Executive Officers (see Company's
Organization & Compensation Committee Report on page 10) the following
amounts which are subject to increase or decrease in future years:
R.S.Evans $1,320,784; L.H. Clark $648,486; R.J.Muller $331,427; D.S.Smith
$448,924; M.L.Raithel $340,689. Under the program one third of the account
balance in any year will be payable to the named executive.
(2) Amounts shown are the fair market value at date of grant of shares of
restricted stock awarded to the named executive officers to provide
retirement benefits that would have been earned by them
5
<PAGE>
under the Company's qualified pension plan but for the application of
certain limits imposed by the Internal Revenue Code (see Report on
Executive Compensation by the Organization and Compensation Committee on
page 10). Such shares will vest after 10 years of service or upon age 65,
unless the restrictions are waived by the Committee upon early retirement.
(3) Shares of restricted stock issued under the Company's Restricted Stock
Award Plan are generally subject to performance-based conditions on vesting
and are classified as long term incentive awards reportable upon grant in
Section D. Long Term Incentive Awards In Last Fiscal Year and in the column
LTIP Payouts of this table upon vesting. In October 1996 the Organization
and Compensation Committee amended the performance-based restricted stock
awards granted in 1993 and 1994 to change the condition for lapse of
restrictions from an all-or-nothing approach based on exceeding the
specified benchmark to a sliding-scale approach using the same benchmark,
and on November 6, 1996 restrictions lapsed on an aggregate of 34,368
shares of the 1994 grant (23.26%). The shares received by Messrs. Evans,
Clark, Muller, Smith and Raithel upon such lapse of restrictions are
included in the LTIP Payment for 1996.
Theshares of restricted stock under the Restricted Stock Award Plan held by
each of the persons identified in the table and the aggregate value thereof
at December 31, 1996 were as follows:
RESTRICTED STOCK AWARD PLAN
----------------------------------------------------
RESTRICTED AGGREGATE
STOCK HELD LTIP RESTRICTED AGGREGATE
# OF SHARES # OF SHARES SHARES HELD VALUE
----------- ----------- ----------- ---------
R.S. Evans .......... 187,650 205,044 392,694 $11,388,126
L.H. Clark .......... 2,400 111,711 114,111 3,309,219
R.J. Muller ......... 7,350 42,056 49,406 1,432,760
D.S. Smith .......... 750 79,067 79,817 2,314,679
M.L. Raithel ........ 3,300 35,306 38,606 1,119,560
Theshares of restricted stock which a re performance based, listed under
the heading "LTIP," may lapse upon failure of the performance criteria, and
so there is no assurance that the executive will realize the value
presented above for such shares. Dividends are paid on all restricted stock
at the same rate as other shares of outstanding Common Stock and are
included in the column Other Annual Compensation of this table.
(4) Amounts in each case consist of the Company's matching contribution for the
purchase of Common Stock in the Company's Saving & Investment Plan (401k)
and premiums for life insurance.
6
<PAGE>
B. OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended December
31, 1996.
NUMBER OF % OF
SECURITIES TOTAL OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE OR
SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR(1) $/(SH)(2) DATE VALUE(3)
---- ---------- ------------- ---------- ---------- ----------
R.S. Evans ....... 45,000 9.36% 27.59 5/06/2006 $360,450
L.H. Clark ....... 37,500 7.80% 27.59 5/06/2006 300,375
R.J. Muller ...... 15,000 3.12% 27.59 5/06/2006 120,150
D.S. Smith ....... 22,500 4.68% 27.59 5/06/2006 180,225
M.L. Raithel ..... 15,000 3.12% 27.59 5/06/2006 120,150
- - -------------
(1) No SARs were granted.
(2) The exercise price of options granted under the plan were and may not be
less than 100% of the fair market value of the shares on the date of grant.
Options granted become exercisable 50% one year, 75% two years and 100%
three years after grant and expire, unless exercised, ten years after
grant. If employment terminates, the optionee may exercise the option only
to the extent it could have been exercised on the date his employment
terminated and within three months thereof. In the event employment
terminates by reason of retirement, permanent disability or change in
control, options become fully exercisable. The exercise price may be paid
by delivery of shares owned for more than six months and income tax
obligations related to exercise may be satisfied by surrender of shares
received upon exercise, subject to certain conditions.
(3) The amounts shown were calculated using a Black-Scholes option pricing
model which derives a value of $8.01 per share for each option granted. The
estimated values assume a risk-free rate of return of 6.53%, stock price
volatility of 26.89% a dividend pay-out ratio of 1.81% and an average
option term of 4.75 years. The actual value, if any, that an executive may
realize will depend upon the excess of the stock price over the exercise
price on the date the option is exercised, so that there is no assurance
the value realized by an executive will be at or near the value estimated
using the Black-Scholes model.
C. AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information concerning options exercised
during the fiscal year ended December 31, 1996 by each of the named executive
officers and the value of unexercised options held by such executive officers on
December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS(1) AT OPTIONS/SARS(1) AT
ACQUIRED ON VALUE FISCAL YEAR END (#) FISCAL YEAR END ($)(2)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
R.S. Evans ......... 0 0 405,000 / 90,000 5,080,744 / 455,344
L.H. Clark ......... 0 0 81,750 / 78,750 762,306 / 359,166
R.J. Muller ........ 67,500 709,078 18,000 / 28,500 156,544 / 127,365
D.S. Smith ......... 0 0 87,375 / 46,875 912,287 / 229,576
M.L. Raithel ....... 15,750 248,640 82,125 / 31,875 875,739 / 153,684
</TABLE>
- - ---------------
(1) No SARs were granted.
(2) Computed based upon the difference between aggregate fair market value and
aggregate exercise price.
7
<PAGE>
D. LONG TERM INCENTIVE AWARDS IN LAST FISCAL YEAR
The following table shows long term incentive awards to the named executive
officers during the fiscal year ended December 31, 1996.
PERFORMANCE
NUMBER OR OTHER
OF SHARES PERIOD UNTIL
UNITS OR OTHER MATURATION
RIGHTS (#) OR PAYOUT
-------------- --------------
R.S. Evans ............... 60,000 5% to 50% 11/06/98
5% to 100% 5/06/2001
L.H. Clark ............... 30,000 5% to 50% 11/06/98
5% to 100% 5/06/2001
R.J. Muller .............. 4,500 5% to 50% 11/06/98
5% to 100% 5/06/2001
D.S. Smith ............... 18,750 5% to 50% 11/06/98
5% to 100% 5/06/2001
M.L. Raithel ............. 6,000 5% to 50% 11/06/98
5% to 100% 5/06/2001
All long term incentive awards ("LTIP shares") were made under the
Company's Restricted Stock Award Plan. During the restriction period the LTIP
shares are subject to forfeiture and may not be sold, transferred, assigned or
pledged ("the restrictions"). The restrictions on the LTIP shares shall
automatically lapse in accordance with the following criteria:
1) If on November 6, 1998 the price of the Company's Common Stock on
such date exceeds $27.59, adjusted for stock splits and similar
transactions (the "Stock Price Test") and the total return on the Company's
Common Stock (based on stock price appreciation with dividends reinvested
in Common Stock) since May 6, 1996 exceeds the S&P 500 total return, then
the restrictions will lapse on five percent of the LTIP share award for
each one percentby which the Crane total return exceeds the S&P 500 total
return, up to 50 percent of the LTIP share award;
2) If on May 6, 2001 the Stock Price Test is met and the total return
on the Company's Common Stock (based on stock price appreciation with
dividends reinvested in Common Stock) since November 6, 1998 exceeds the S
& P 500 total return, then the restrictions will lapse on five percent of
the LTIP share award for each one percent by which the Crane total return
exceeds the S & P 500 total return, up to 50 percent of the LTIP share
award;
3) If on May 6, 2001 (if any portion thereof remains unvested by
reason of the failure to satisfy sections 1 and 2 above) the Stock Price
Test is met and the total return on the Company's Common Stock (based on
stock price appreciation with dividends reinvested in Company Common Stock)
since May 6, 1996 exceeds the S & P 500 total return, then the restrictions
will lapse on 10 percent of the LTIP share award for each one percent by
which the Crane total return exceeds the S & P 500 total return, up to 100
percent of the LTIP share award; and
4) Restrictions lapse on death, permanent disability, normal
retirement age or a change in control.
On May 6, 1996 the average price of a Company common share was $27.59.
However, except in the case of death, disability or a change-in-control,
recipients will realize value (other than dividends) only if the objectives
stated above are achieved. Thus there is no assurance that any of the LTIP
shares awarded will have value to the recipients.
8
<PAGE>
E. PERFORMANCE GRAPH
The following performance graph compares the total return to shareholders
of an investment of $100 in each of Crane Co. Common Stock, the S&P 500 Index
and the Dow Jones Industrial-Diversified Index in which the Company is included
as one of 18 companies from December 31, 1991 to December 31, 1996. "Total
Return" means the increase in value of an investment in a security over a given
period assuming reinvestment in that security of all dividends received thereon
duringthe period.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG CRANE CO.,
S&P 500 AND DOW JONES INDUSTRIAL-DIVERSIFIED INDEX(1)
FISCAL YEAR ENDING DECEMBER 31,
[GRAPHICAL REPRESENTATION OF MOUNTAIN CHART]
Crane Co. ($) 100 103 111 124 174 209
S&P 500 ($) 100 108 118 120 165 203
DJ Industrial-Diversified ($) 100 116 142 130 171 221
(1) Peer companies in the Dow Jones Industrial-Diversified Index are:
Allied-Signal, CBI Industries, Cooper Industries, Dexter Corp., Dover
Corp., FMC Corp., Harsco Corp., Illinois Tool Works, Ingersoll-Rand Co.,
National Service Industries, Parker Hannifin Corp., PPG Industries, Raychem
Corp., Stanley Works, Tenneco Inc., Trinova Corp.
9
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
BY THE ORGANIZATION AND COMPENSATION
COMMITTEE OF THE COMPANY
In 1996 the Organization and Compensation Committee of the Board of
Directors of the Company (the "Committee") continued to review and, where
appropriate, adjust its previously established three-pronged approach to
executive officer and key employee compensation: competitive base salaries;
short and medium-term cash incentive compensation linked to measurable increases
in shareholder value; and long-term incentive compensation utilizing awards of
restricted common stock and stock options the value of which is keyed to
increases in shareholder returns (primarily increases in the price of the
Company's Common Stock). The Committee established targets for ownership of
Company Common Stock to encourage executive officers and key employees to hold a
significant portion of their net worth in the Company's Common Stock so that the
future price of the Company's Common Stock will constitute a key element in
their financial planning and ultimately in their net worth. In addition, the
Committee continued a program using shares of restricted stock to offset
significant limitations in pension benefits imposed upon certain executive
officers and key employees by federal tax policies while concurrently preserving
the incentive linkage between improved share performance and the recipient's
ultimate return.
A. BASE SALARIES. While the Committee believes the Company's base salaries
remain sufficiently competitive to attract and retain qualified executive
officers and key managers, the Committee continued to shift its compensation
emphasis from base salary and bonus based on a percentage thereof to incentive
compensation, the amount of and eligibility for which are based on measurable
increases in shareholder value and improved stock performance as discussed
below. Increases in base salaries of executive officers averaged less than 4%
during 1996.
B. SHORT AND MEDIUM-TERM INCENTIVE COMPENSATION--FOCUSED ON ECONOMIC VALUE
ADDED. The Company's annual incentive compensation program utilizes the
principles of economic value added ("EVA") with a three year rolling horizon.
EVA is defined as the difference between the return on total capital invested in
the business and the cost of capital, multiplied by total capital employed. The
Committee believes that, compared to such common performance measures as return
on capital, return on equity, growth in earnings per share and growth in cash
flow, EVA has the highest correlation with the creation of value for
shareholders over the long term.
The program does not involve the meeting of pre-established goals, as such.
Rather, the increase or decrease in EVA for a business unit during the year,
both absolutely and compared to the prior year, is the sole basis for any
incentive compensation award, thereby motivating managers to focus on continuous
value improvement. Awards are generally uncapped to provide maximum incentive to
create value and, because awards may be positive or negative, executives can
incur penalties when value is reduced.
While particular EVA formulas are tailored to the size and unique
characteristics of the business unit or units for which a specific executive is
responsible, the key elements of the EVA formula applicable to any individual
are the cost of capital (generally the cost of capital to the Company), the
return on capital, the amount of capital employed in the business unit, the net
operating profit of the unit after tax and the prior year's EVA. Awards are
calculated on the basis of year end results, and award formulas utilize both a
percentage of the change in EVA of a business unit from the prior year, whether
positive or negative, and a percentage of the positive EVA, if any, in the
current year. EVA awards are calculated for the Company as a whole for the
corporate executives or where appropriate for the business unit for which the
executive is responsible. Executives receive a percentage of the measured
entity's award. For executives responsible for more than one business unit, the
formulais based on a percentage of the aggregate EVA, positive or negative, of
the units reporting to the executive.
After the EVA award, whether positive or negative, for a particular year
has been determined, it is credited to the executive's "bank account." If the
executive's account is a positive number, one-third of the account balance is
paid to the executive in cash annually. The remainder of the account balance
10
<PAGE>
represents that individual's "equity" in the account for future years. If EVA
awards are negative, an account balance can be negative. In such case, the
executive will receive no incentive compensation payments until the aggregate of
subsequent EVA awards results in a positive account balance. Each year, the
Company adds interest to a positive balance or charges interest on a negative
balance at an appropriate money market rate. The account is subject to
forfeiture in the event an executive leaves the Company by reason of termination
or resignation. The bank account concept with the three year payout at risk
gives the incentive compensation program a longer term perspective and provides
participants with ownership incentives as the account balances build or decline.
Although the program is formula driven, the Committee retains discretion to
review and adjust its impact on business units and individuals for
reasonableness and to preserve its incentivizing objectives, except that the EVA
award percentages of the individuals named in the Summary Compensation Table are
capped by the Committee at the beginning of the year.
C. LONG-TERM INCENTIVE COMPENSATION--FOCUSED ON SHAREHOLDER RETURN. The
Company has used its existing Stock Option Plan and Restricted Stock Award Plan
as the foundation for a long-term stock-based incentive compensation program
focused on shareholder return. The Committee believes that executive officers
approach their responsibilities more and more like owners of the Company as
their holdings of and potential to own Company Common Stock increase. This
philosophy starts with the Board of Directors, whose non-employee members
receive 40% of their annual retainer in Company Common Stock. To date, 12% of
the Company's Common Stock is beneficially owned by directors, management and
employees, with the Chairman and Chief Executive Officer owning 4.2% and the
four other Named Executive Officers owning 1.9%. (See Beneficial Ownership of
Common Stock by Directors and Management, page 4.) In early 1996, the Committee
established targets for ownership of Company Common Stock by executive officers
and key employees (expressed as a multiple of their base salary, ranging from a
multiple of one for salaries up to $125,000 to a multiple of five for salaries
above $500,000). The Committee also continued to discourage sales of stock
acquired by such individuals through the vesting of restricted stock grants and
option exercises.
(i) The Stock Option Plan. The Stock Option Plan is administered by the
Committee, which is authorized to grant options to key employees of the Company
or any majority owned subsidiary of the Company. Options granted become
exercisable 50% one year after the grant date, 75% two years after the grant
date and 100% three years after the grant date and the option price must not be
less than 100% of the average fair market value on the date of grant. Options
expire, unless exercised, ten years after grant. Because the Company's Stock
Option Plan requires that options be granted at no less than fair market value,
a gain can only result if the Company's share price increases from the date of
grant. This incentive program is, therefore, directly tied to increases in
shareholder value. In 1996, the Committee granted 480,600 stock options to the
officers and key employees of the Company.
(ii) Restricted Stock Award Plan. Under the Restricted Stock Award Plan,
restricted shares of the Company's Common Stock may be awarded to selected key
officers and employees. The Committee administers the plan and has the authority
to select participants to determine the amount and timing of awards, restriction
periods, market value thresholds and any terms and conditions applicable to
grants. Since 1990 the Committee has established various performance goals for
the lapse of restrictions on stock awarded under the Plan involving the
achievement over 2-1/2 and 5 year intervals of returns for the Company's
shareholders (Common Stock price appreciation plus dividends) equal to or better
than certain performance benchmarks, e.g. 125% of the shareholder return of the
S&P 500 , 150% of such return or 17-1/2% compounded annually. If the conditions
are not met, the restricted stock awards are forfeited after five years, subject
to the discretion of the Committee to adjust the terms of such awards. In 1996,
35,625 shares of restricted stock were forfeited because of failure to meet
specified performance goals. In 1996, the Committee awarded 200,250 shares of
performance-based restricted stock to officers and employees of the Company with
the condition for lapse of restrictions (first used in 1995) on a sliding scale
approach from 101% to 110% of the S&P 500 return (rather than a single target
percentage of 125% of the S&P 500 return) to create an achievable incentive.
(See Long Term Incentive Awards in Last Fiscal Year on page 7 for a description
of the 1996 performance goals.) In addition, the Committee amended the
restricted stock
11
<PAGE>
awards granted in 1993 and 1994 to make the same change in the condition for
lapse of restrictions, and restrictions lapsed on 34,368 shares of the 1994
grant (23.26%) at its 2-1/2 year interval.
In 1995, the Committee adopted a program to make up the shortfall in
executive officer and key employee pension benefits imposed by certain federal
tax policies. Under this program, the Committee will grant to certain executive
officers and key employees who have been impacted by such tax limitations
amounts of restricted stock with a market value at the date of grant
approximately equivalent to the present value of that portion of the Company's
retirement benefit at normal retirement (age 65) lost by reason of the tax
limitations and, in the case of the Chairman and Chief Executive Officer, at age
55 with 15 years of service in that capacity. The Committee is of the view that
the grants provide the potential to offset the tax limitations on the
executive's future pension benefits, but require the recipient to look to future
increases in shareholder value if that objective is to be actually achieved. On
the basis of that approach, the Committee awarded the amounts of restricted
stock set forth in the Summary Compensation Table, the restrictions on which
will lapse after 10 years of service or upon reaching age 65, whichever is
earlier, with the understanding that the Committee can waive the conditions for
the lapse of restrictions in the event of a request for early retirement.
D. COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. The Committee is of the
view that the Chief Executive Officer compensation package should emphasize
incentives closely linked to shareholder return through significant grants of
stock options and performance-based restricted stock. The Committee noted the
strong performance of the Chief Executive Officer in 1996, but determined to
retain the base salary of the Chief Executive Officer at $640,000, a level
which, in the judgment of the Committee, is appropriate for the Chief Executive
Officer of a corporation of the size and complexity of the Company in its
industrial category, so that further compensation to the Chief Executive Officer
can only result from improvements in corporate performance and shareholder
returns. The Chief Executive Officer's 1996 incentive compensation award of
$865,514 under the EVA Incentive Compensation Plan for Executive Officers was
calculated on the basis of the increase in the Company's EVA in 1996 plus a
pre-established percentage of that EVA and credited to his "account" as provided
for in the EVA Plan. The actual amount paid to the Chief Executive Officer for
1996 fromhis account was $660,392. The balance in the account is subject to
increase or decrease depending upon EVA in subsequent years. The Chief Executive
Officer was awarded 60,000 shares of performance-based restricted stock under
the Restricted Stock Award Plan and 45,000 options under the Stock Option Plan
which in the Committee's judgment will provide the appropriate incentive to a
Chief Executive Officer of a Company the size and breadth of Crane Co. In 1996,
the Chief Executive Officer forfeited 15,000 shares of performance-based
restricted stock because the performance goals established in 1991 were not met,
while restrictions lapsed on 13,956 shares of restricted stock at the 2-1/2 year
interval of the 1994 grant (23.26%) after the conditions for lapse were changed
by the Committee from an all-or-nothing target to the sliding-scale approach
used in the 1995 and 1996 grants. If the established performance goals for the
1996 grant are not met (see Long Term Incentive Awards in Past Fiscal Year on
page 7 above), those shares of restricted stock will be forfeited at the end of
five years. The Chief Executive Officer was also granted 27,450 shares of
time-based restricted stock to offset the impact of the tax limitations on his
pension benefit under the Company's defined benefit pension plans. (See
paragraph D above.)
E. OMNIBUS BUDGET REVENUE RECONCILIATION ACT OF 1993. In 1993, Congress
adopted the Omnibus Budget Revenue Reconciliation Act of 1993, certain
provisions of which (Section 162(m) of the Internal Revenue Code) for tax years
beginning after December 31, 1993 limit to $1 million per employee the
deductibility of compensation paid to the executive officers required to be
listed in the Company's proxy statement unless the compensation meets certain
specific requirements. The EVA Incentive Compensation Program for Executive
Officers, which was approved by the shareholders at the 1994 Annual Meeting, is
intended to constitute a performance-based plan meeting the criteria for
continued deductibility set out in the applicable regulations. In addition, the
Company believes that all stock options granted to date under the Stock Option
Plan and all performance-based grants of restricted stock to date under the
Restricted Stock Award Plan will meet the requirements of Section 162(m) for
deductibility. The shares of time-based restricted stock granted in 1996 to
offset the impact of the tax limitations on pension benefits, as described in
paragraph D above, would not satisfy the
12
<PAGE>
criteria of Section 162(m), and accordingly compensation expense in respect of
income recognized by the executive officer upon lapse of the restrictions would
not be deductible to the extent that such income, together with all other
compensation in such year that did not satisfy the criteria of Section 162(m),
exceeded $1 million. As a matter of policy, the Committee intends to develop and
administer compensation programs which will maintain deductibility under Section
162(m) for all executive compensation, except in the limited circumstance when
the materiality of the deduction is in the judgment of the Committee
significantly outweighed by the incentive value of the compensation.
Submitted by:
The Organization and Compensation
Committee of the Board of Directors
of Crane Co.
B. Yavitz, Chairman
D. R. Gardner
J. Gaulin
D. C. Minton
RETIREMENT BENEFITS
All officers of the Company, including the individuals identified in the
Summary Compensation Table, are participants in the Company's pension plan for
non-bargaining employees. Directors who are not employees do not participate in
the plan. Eligibility for retirement benefits is subject to certain vesting
requirements which include completion of five years of service where employment
is terminated prior to normal or other retirement or death as determined by
applicable law and the plan. Benefit accruals continue for years of service
after age 65.
The annual pension benefits payable under the pension plan are equal to
1-2/3% per year of service of the participant's average annual compensation
during the five highest compensated consecutive years of the ten years of
service immediately preceding retirement less 1-2/3% per year of service of the
participant's Social Security benefit, up to a maximum deduction of 50% of the
Social Security benefit. Compensation for purposes of the pension plan is
defined as total W-2 compensation less (i) the imputed income value of group
life insurance and auto allowance, (ii) income derived from participation in the
Restricted Stock Award Plan and (iii) on or after January 1, 1993, incomederived
from the Stock Option Plan and a former stock appreciation rights plan. In
general, such covered compensation for any year would be equivalent to the sum
of the salary set forth in the Summary Compensation Table for such years plus
the bonus shown in the Table for the immediately preceding year.
The table below sets forth the estimated annual benefit payable on
retirement at normal retirement age (age 65) under the Company's pension plan
based on benefit accruals through December 31, 1996 for specified salary and
years of service classifications, and assumes benefits to be paid in the form of
a single life annuity. The amounts have not been reduced by the Social Security
offset referred to above.
PENSION PLAN TABLE
AVERAGE YEARS OF SERVICE
ANNUAL -----------------------------------------------
COMPENSATION 10 20 25 30 35
------------ ------ ------ ------ ------ ----
$150,000 ............. $25,005 $50,010 $62,513 $75,015 $87,518
$175,000 ............. 29,173 58,345 72,931 87,518 102,104
$200,000 ............. 33,340 66,680 83,350 100,020 116,690
$225,000 ............. 37,508 75,015 93,769 112,523 131,276*
$235,000 ............. 39,175 78,349 97,936 117,524 136,111*
$250,000** ........... 41,675 83,350 104,188 125,025* 145,863*
(footnotes on following page)
13
<PAGE>
- - ---------------
* Effective January 1, 1996, the actual retirement benefit at normal
retirement date payable pursuant to Section 235(a) of the Tax Equity and
Fiscal Responsibility Act of 1982 (and subsequent to 1986 at the age at
which unreduced Social Security benefits may commence pursuant to the Tax
Reform Act of 1986) may not exceed the lesser of $120,000 or 100% of the
officer's average compensation during his highest three consecutive
calendar years of earnings (the "Tax Act Limitation"). The Tax Act
Limitation may be adjusted annually for changes in the cost of living. The
1997 limit is $125,000. The dollar limit is subject to further reduction to
the extent that a participant has fewer than 10 years of service with the
Company or 10 years of participation in the defined benefit plan.
** Between January 1, 1989 and December 31, 1993, for the purpose of
determining benefit accruals and benefit limitations under the pension plan
for all plan years beginning in 1989, a participant's compensation is
deemed to be limited to $200,000 indexed for inflation ($235,840 for 1993)
( "Limitation "). As a result of the Limitation, the covered compensation
under the Company's pension plan for each of Messrs. Evans, Clark, Muller,
Smith and Raithel (who have 23, 6, 12, 5 and 26 years of service credit,
respectively) was limited to $235,840 in 1993. However, in no event will
the Limitation reduce any participant's accrued benefit below his accrued
benefit as of December 31, 1988. Commencing January 1, 1994, the
compensation limit was further reduced to $150,000 indexed for inflation in
future years ( "OBRA '93 Limitation "). As a result of the OBRA '93
Limitation, the covered compensation under the Company's pension plan for
the foregoing individuals for the years 1994 through 1996 was limited to
$150,000, and was increased to $160,000 for 1997. In no event will the OBRA
'93 Limitation reduce any participant's accrued benefit as of December 31,
1993.
OTHER AGREEMENTS AND INFORMATION
The Company has entered into indemnification agreements with R.S. Evans,
each other director of the Company, Messrs. Clark, Muller, Smith and Raithel and
the four other executive officers of the Company, the form of which was approved
by the shareholders of the Company at the 1987 Annual Meeting. The
Indemnification Agreements require the Company to indemnify the officers or
directors to the full extent permitted by law against any and all expenses
(including advances thereof), judgments, fines, penalties and amounts paid in
settlement incurred in connection with any claim against such person arising out
of the fact that he was a director, officer, employee, trustee, agent or
fiduciary of the Company or was serving as such for another entity at the
request of the Company, and to maintain directors and officers liability
insurance coverage or to the full extent permitted by law to indemnify such
person for the lack thereof.
Each of the individuals named in the Summary Compensation Table (and
certain other executive officers) has an agreement which, in the event of a
change in control of the Company, provides for the continuation of the
employee's then current base salary, bonus plan and benefits for the three year
period following the change in control. Upon termination within three years
after a change in control, by the Company without cause or by the employee with
"Good Reason" (as defined in the agreement), the employee is immediately
entitled to a proportionate amount of the last year's bonus, three times
(Messrs. Evans, Clark, Smith and Raithel) or two times (Mr. Muller) his annual
salary and either the last year's bonus or the average of the last three years'
bonuses if higher, and all accrued deferred compensation and vacation pay, and
employee benefits, medical coverage and other benefits also continue for three
years after termination. "Good Reason" under the agreements includes, among
other things, any action by the Company which results in a diminution in the
position, authority, duties or responsibilities of the employee. The agreements
of Messrs. Evans, Clark, Smith and Raithel and one other executive officer not
named in the Summary Compensation Table also provide that the employee may
terminate his employment for any reason during the 30 day period immediately
following the first year after the change of control, which shall be deemed
"Good Reason" under the agreement. If it is determined that any economic benefit
or payment or distribution by the Company to the individual, pursuant to the
agreement or otherwise, (including, but not limited to, any economic benefit
received by the employee by reason of the acceleration of rights under the
various options and
14
<PAGE>
restricted stock plans of the Company) ("Payment") is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code (the "Code"), the
agreements provide that the Company shall make additional cash payments to the
employee such that after payment of all taxes including any excise tax imposed
on such payments, the employee will retain an amount equal to the excise tax on
all the Payments. The agreements are for a three-year period, but are
automatically renewed annually for a three-year period unless the Company gives
notice that the period shall not be extended.
OTHER TRANSACTIONS AND RELATIONSHIPS
TRANSACTIONS
During 1996, the Company purchased approximately $223,000 worth of products
from Peerless Winsmith, Inc. ("Peerless"), a wholly owned subsidiary of HBD
Industries, Inc. ("HBD"). Mr. T.M. Evans, the father of Mr. R.S. Evans, is the
controlling shareholder and a director of both companies. Mr. R.S. Evans is a
shareholder and director of HBD.
The law firm of Kirkpatrick & Lockhart LLP, of which Mr. Queenan is senior
counsel, furnished legal services to the Company in 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Organization and Compensation Committee is or has ever
been an employeeof the Company and no executive officer of the Company has
served as a director or memberof a compensation committee of another company of
which any member of the Committee is an executive officer.
APPROVAL OF THE SELECTION OF AUDITORS
The Board of Directors proposes and recommends that the shareholders
approve the selection of the firm of Deloitte & Touche LLP as independent
auditors for the Company for 1997. Deloitte & Touche LLP have been the
independent auditors for the Company since 1979. Unless otherwise directed by
the shareholders, proxies will be voted for approval of the selection of
Deloitte & Touche LLP to audit the books and accounts of the Company for the
current year. In accordance with the Company's practice, a member of the firm
will attend the Annual Meeting, have an opportunity to make a statement if he
desires to do so and to respond to appropriate questions which may be askedby
shareholders.
MISCELLANEOUS
Solicitation of Proxies. The Company will bear all of the costs of the
solicitation of proxies for use at the Annual Meeting. In addition to the use of
the mails, proxies may be solicited by personal interview, telephone and
telegram by directors, officers and employees of the Company, who will undertake
such activities without additional compensation. To aid in the solicitation of
proxies, the Company has retained Beacon Hill Partners, Inc. which will receive
a fee for its services of $5,500 plus up to $1,750 in expenses. Banks, brokerage
houses and other institutions, nominees and fiduciaries will be requested to
forward the proxy materials to the beneficial owners of the Common Stock held of
record by such persons and entities and will be reimbursed for their reasonable
expenses in forwarding such material.
Incorporation by Reference. The Report on Executive Compensation on pages
10-13 and Section E. Performance Graph on page 9 of this Proxy Statement shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934 except to the extent that the
Company specifically incorporates said report or said graph by reference and
neither the report nor the graph shall otherwise be deemed filed under such
Acts.
Next Annual Meeting. The Bylaws provide that the Annual Meeting of the
Shareholders of the Company will be held on the second Monday in May in each
year unless otherwise determined by the Board of Directors. Appropriate
proposals of security holders intended to be presented at the 1998
15
<PAGE>
Annual Meeting must be received by the Company for inclusion in the Company's
proxy statement and form of proxy relating to that meeting on or before November
7, 1997.
Shareholders who do not expect to attend in person are urged to sign, date
and return the enclosed proxy in the envelope provided. In order to avoid
unnecessary expense, we ask your cooperation in mailing in your proxy promptly,
no matter how large or how small your holdings may be.
By Order of the Board of Directors,
AUGUSTUS I. DUPONT
Secretary
16
<PAGE>
CRANE CO.
ANNUAL MEETING OF SHAREHOLDERS APRIL 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned does hereby appoint and constitute R. S. Evans, A.I. duPont and
D.S. Smith and each of them, his true and lawful agents and proxies with power
of substitution, and hereby authorizes each of them to vote, as directed on the
reverse side of this card, or, if not so directed, in accordance with the Board
of Directors' recommendations, all shares of Crane Co. held of record by the
undersigned at the close of business on February 28, 1997 at the Annual Meeting
of Shareholders of Crane Co. to be held in the Freedom II Room at the Sheraton
Stamford Hotel, One First Stamford Place, Stamford, Connecticut on Monday, April
21, 1997, at 10:00 a.m., Eastern Daylight Time, or at any adjournment thereof
with all the powers the undersigned would possess if then and there personally
present, and to vote, in their discretion, upon such matters as may come before
said meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
FOLD AND DETACH HERE
<PAGE>
0309
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR election of
directors and FOR proposal 2.
- - --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
AND FOR PROPOSAL 2.
- - --------------------------------------------------------------------------------
1. Election of Directors. FOR / / WITHHELD / /
Nominees: R.S. Evans, D.R. Gardner and D.C. Minton
2. Approval of Deloitte & Touche LLP as independent auditors for the Company for
1997.
FOR / / AGAINST / / ABSTAIN / /
The signer hereby revokes all proxies
previously given by the signer to vote
at said meeting or any adjournments
thereof.
Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
give full title as such.
--------------------------------------
--------------------------------------
SIGNATURE(S) DATE
FOLD AND DETACH HERE
